In January it is typical for most people to begin thinking about what they might owe or get refunded in taxes this April from the previous year. However, it is important to begin planning now for 2014 in order to reduce your tax burden for April of next year. There are many provisions (deductions, credits, exclusions, etc.) that can have a significant impact on the final amount of your tax burden. As a result of the “Fiscal Cliff Deal” reached at the beginning of 2013 many tax provisions are expiring in 2014. Here you will find an overview of some of the more common expiring provisions that could impact your wallet.
Expiring tax provisions for Individuals:
- Teachers will lose the $250 deduction for classroom expenses
- Tuition and Fees above the line deduction will go away, although you will still be able to claim tax credits.
- The Exclusion of discharge of principal residence indebtedness from gross income
- Mortgage insurance premiums will no longer be treated as qualified residence interest as part of your Schedule A deduction
- The deduction for Sales Taxes on Schedule A (State Income Tax paid will now only be State Income Tax).
- For those over 70 ½ previously had the option to take Tax-free distributions from individual retirement accounts and immediately choose to donate for charitable purposes this option is no longer available. You will now have take the report the distribution as income, then take the deduction for charitable on Schedule A.
- Temporary exclusion of 100% of gain on qualified small business stock
Expiring tax provisions for Business Owners:
- Section 179 Depreciation deduction in 2013 was $500,000 in 2014 has expired and businesses will can only take a Section 179 deduction for a maximum of $25,000
- 50% Bonus Depreciation goes completely away
- You will no longer be able to take advantage of the tax credit for research and experimentation expenses
- Work Opportunity Credit expires for 2014
- 15 – year straight line cost recovery for qualified leasehold, restaurant and retail improvements these will go back to normal leasehold improvements subject to the 39-year life.
- Enhanced charitable deduction for contributions of food inventory expires
Expiring tax credits:
- Credit for construction of energy-efficient new homes
- Credit for energy-efficient appliances
Again, these are just the most common provisions that are scheduled to expire in 2014. To maximize the provisions available to you and reduce your 2014 tax burden we recommend contacting your CPA early this year. Akin, Doherty, Klein & Feuge, P.C. has a staff full of experienced accountants ready to assist you in investigating how expiring provisions could impact you in 2014. Please contact us for further assistance as well as full list of expiring tax provisions.